National Bank Holdings Corporation · NYSE:NBHC
National Bank — Q2 2020 Earnings Presentation
41 slides from National Bank's earnings presentation, Jul 22, 2020
Slide 1: Q2 2020 Investor Presentation
Q2 – 2020 INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking statements” within the meaning of the deferred tax assets or the need for a valuation allowance; continued consolidation Private Securities Litigation Reform Act of 1995. Forward-looking statements in the financial services indus
Slide 3: About Non-GAAP Financial Measures
ABOUT NON-GAAP FINANCIAL MEASURES Certain of the financial measures and ratios we present, including “average should not be considered a substitute for financial information presented in tangible assets,” “return on average tangible assets,” “average tangible common accordance with GAAP and you shou
Slide 4: Well-Positioned to Support Our Clients and Navigate Uncertain Markets
WELL-POSITIONED TO SUPPORT OUR CLIENTS AND NAVIGATE UNCERTAIN MARKETS ‒ Fast and comprehensive COVID-19 response to: Protect the health and safety of our associates Ensure the safety and soundness of the bank Act on every opportunity to prudently support our clients and communities ‒ Well-posi
Slide 5: Supporting Associates, Clients & Communities
SUPPORTING ASSOCIATES, CLIENTS & COMMUNITIES ASSOCIATES CLIENTS COMMUNITIES Executing on four-phase plan to Funded $359 million in SBA Donated to nonprofits making safely return to office including Paycheck Protection Program masks and hand sanitizer for daily health screenings loans for 2,164 clien
Slide 6: Q2-2020 Company Highlights
Q2-2020 COMPANY HIGHLIGHTS 6
Slide 7: Second Quarter 2020 Financial Highlights
SECOND QUARTER 2020 FINANCIAL HIGHLIGHTS CAPITAL RATIOS ‒ Strong capital levels with $300 million in excess capital over 13.2% Common Equity Tier 1 7.0% common equity tier 1 risk-based regulatory requirement LIQUIDITY ‒ Ample liquidity with access to $1.9 billion in readily available funds Loan to d
Slide 8: Regulatory Capital
REGULATORY CAPITAL Capital Ratios – 2Q20 TIER 1 LEVERAGE 10.5% COMMON EQUITY TIER 1 RISK-BASED 13.2% TIER 1 RISK-BASED 13.2% TOTAL RISK-BASED 14.3% TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS(1) 10.6% (1)Represents a non-GAAP financial measure. See Appendix for a reconciliation of these measures. – $3
Slide 9: Liquidity
LIQUIDITY As of 6/30/2020 ($ in millions) On-Balance Sheet Liquidity Cash $78.8 Unencumbered Securities 255.9 Total On-Balance Sheet Liquidity 334.7 Off-Balance Sheet Liquidity FHLB Facility 1,026.0 PPPLF Facility 358.8 Other 190.5 Total Off-Balance Sheet Liquidity 1,575.3 Fed Discount Window 32.9 T
Slide 10: Company Highlights: Attractive Markets
COMPANY HIGHLIGHTS ATTRACTIVE MARKETS Headquarters Denver, CO Banking Centers 101 Listing NYSE: NBHC BALANCE SHEET 2Q20 Total Assets (mm) $6,385 Total Loans (mm) $4,782 Total Deposits (mm) $5,414 KEY RATIOS YTD20 Common Equity Tier 1 13.2% Tier 1 Leverage 10.5% ROATA(1)(2) 1.14% / 1.19%(3) 48 bankin
Slide 11: U.S. Unemployment Rates by State
U.S. UNEMPLOYMENT RATES BY STATE U.S. National Unemployment Rate 11.1% (Seasonally adjusted, June 2020) WA 9.8% VT ME 9.4% 6.6% MT ND 7.1% 6.1% MN OR 8.6% 11.2% NH 11.8% ID WI SD NY MA 5.6% 8.5% 7.2% 15.7% 17.4% WY MI 7.6% 14.8% RI IA PA 12.4% NV NE 8.0% 13.0% 15.0% 6.7% OH CT IN 10.9% UT IL 9.8% 11
Slide 12: Financial Performance
FINANCIAL PERFORMANCE B® National Bank Holdings CORPORATION
Slide 13: Profitable Steady Growth
PROFITABLE STEADY GROWTH Pre-Provision Net Revenue FTE(2) Net Income EPS (Fully Diluted) ($ in millions) $112.9 ($ in millions) $2.55 $80.4 Non-Adjusted Non-Adjusted $2.16 Adjusted $67.8 Adjusted $83.4 $0.21 $6.3 $60.2 $53.7 $54.7 $1.26 $1.95 $1.12 $35.0 $61.5 $34.8 $1.3 $0.04 $0.79 $0.73 $23.1 $20.
Slide 14: Growth Trends
GROWTH TRENDS – Steadily growing our total assets and loans throughout the years Total Assets Total Loans Tangible Common Equity(2) ($ in billions) ($ in billions) ($ in millions) $6.4 $724.3 $5.9 $5.7 $4.8 $651.4 $662.5 $4.4 $4.8 $4.8 $577.4 $4.7 $4.1 $553.3 $4.6 $478.9 $482.0 $3.2 $2.9 $2.6 $2.2 (
Slide 15: Focus on Efficiency
FOCUS ON EFFICIENCY – In July 2020, announced the consolidation of 12 banking center locations, which will result in annual expense savings of $3.5 million. – QTD efficiency ratio of 61.1%, or 59.2% adjusted for banking center consolidated-related expenses – Including the 12 previously-announced ban
Slide 16: Credit
CREDIT B® National Bank Holdings CORPORATION
Slide 17: Uniquely Diversified $4.8 Billion Loan Portfolio
UNIQUELY DIVERSIFIED $4.8 BILLION LOAN PORTFOLIO ‒ Granular and well-diversified loan portfolio ‒ Self-imposed concentration limits; majority of industry sectors COMMERCIAL limited to 5% or less of total loan commitments 64% of portfolio ‒ Industries requiring in-depth knowledge are managed by speci
Slide 18: COVID-19 High Impact Industries as of 6/30/20
COVID-19 HIGH IMPACT INDUSTRIES AS OF 6/30/20 COMMERCIAL $213.1 INDUSTRIES AND MILLION 4.5% 99 75% TACO BELL LOAN TYPES RESTAURANTS LOANS OF TOTAL CLIENTS QUICK POPEYE’S WENDY’S WITH NO OUTSTANDING LOANS SERVICE BURGER KING DIRECT EXPOSURE $121.5 Aviation MILLION 2.5% 170 53% GAS/AUTO RETAILERS GROC
Slide 19: COVID Modifications as of 6/30/20
COVID MODIFICATIONS AS OF 6/30/20 ‒ Modification requests handled individually on a relationship basis; weekly cash flow forecast monitoring implemented for business clients; and as appropriate, cash equity injections required ‒ Majority of clients are expected to return to regular payments during t
Slide 20: Strong Credit Quality History
STRONG CREDIT QUALITY HISTORY – Allowance for loan losses coverage equal to 302% of non-performing loans – Acquisition fair value marks on acquired loans total $15.2 million, 5.1% of acquired loans or 0.32% of total loans ($ in millions) Non-performing Loans Non-performing Asset Composition 0.66% 0.
Slide 21: Drivers of Allowance for Credit Losses
DRIVERS OF ALLOWANCE FOR CREDIT LOSSES 2020 Primary Changes ACL/Total Loans 1.26% / 1.36%* $9.5 $5.2 Q2 macro- economic variables $0.9 Q1 macro- ALLL/Total Loans $2.3 New loans economic variables 0.88% $60.5** $3.5 CECL Day 1 model impact Allowance required for acquired $39.1 loan portfolio ALLL CEC
Slide 22: Balance Sheet
BALANCE SHEET B® National Bank Holdings CORPORATION
Slide 23: Solid Loan Growth
SOLID LOAN GROWTH Total Loan Originations(1) Total Loans(1) Loan Composition ($ in billions) $1.3 ($ in billions) $4.8 ($4.8 Billion) $1.2 $1.2 $4.4 $4.1 $1.0 $1.0 $3.2 $0.9 $0.9 Owner $2.9 Occupied $2.6 CRE 16% $2.2 CRE C&I 13% 48% Resi Mortgage 15% PPP 7% FY14 FY15 FY16 FY17 FY18 FY19 2Q20 TTM 4Q1
Slide 24: High Quality, Highly Liquid Investment Portfolio
HIGH QUALITY, HIGHLY LIQUID INVESTMENT PORTFOLIO $0.8 Billion Investment Portfolio(1) 0.4% U.S. Agency/Sponsored Agency MBS 32.6% U.S. Agency/Sponsored Agency CMO 67.0% Other (1) Excludes FHLB/FRB stock. – 99.6% of portfolio is U.S. agency/sponsored agency backed – 2Q20 yield 2.03% – 26% of portfoli
Slide 25: Low Cost Transaction Deposits
LOW COST TRANSACTION DEPOSITS ($ in billions) Growing Low Cost Transaction Accounts Deposit Composition Average Transaction Deposits Average Time Deposits Demand & NOW Savings & MM CDs < $250k CDs >= $250k Total $3.9 $4.0 $4.5 $4.7 $5.4 $3.5 $3.6 100% 4% 3% 3% 3% 21% 19% 16% $2.9 24% 35% 37% 37% 37%
Slide 26: Management Team
» MANAGEMENT + TEAM B® National Bank Holdings CORPORATION
Slide 27: Experienced Management Team
EXPERIENCED MANAGEMENT TEAM Tim Laney Aldis Birkans Chairman, President & CEO Chief Financial Officer (39 years in banking) (22 years in financial industry) • Head of Business Services at Regions Financial, where he also • Senior Vice President, Treasurer at NBHC led the transformation of wholesale
Slide 28: Management & Directors
MANAGEMENT & DIRECTORS Beneficial Ownership (as of 6/30/20) BENEFICIAL NBHC MANAGEMENT & DIRECTORS PERCENT OF CLASS(2) OWNERSHIP(1) G. Timothy Laney 785,886 2.54% Aldis Birkans 53,271 0.17% Richard U. Newfield, Jr. 168,967 0.55% Angela Petrucci 7,073 0.02% Ralph W. Clermont 81,159 0.26% Robert E. De
Slide 29: Corporate Governance Overview
CORPORATE GOVERNANCE OVERVIEW 29
Slide 30: Best Practices in Governance and Compensation
BEST PRACTICES IN GOVERNANCE AND COMPENSATION NBHC’s corporate governance policies and executive compensation practices support our business and align with best practices Corporate Governance Executive Compensation Lead Independent Director with robust role and Provide the majority of compensati
Slide 31: Overview of NBHC's Board of Directors
OVERVIEW OF NBHC’S BOARD OF DIRECTORS G. Timothy Laney • President, CEO and Chairman Appointed within last five years • Former Senior Executive Vice President and Head of Business Services at Regions Financial • 24-year tenure at Bank of America, including as a member of Bank of America’s Management
Slide 32: NBHC Board Represents a Diverse Range of Qualifications and Skills
NBHC BOARD REPRESENTS A DIVERSE RANGE OF QUALIFICATIONS AND SKILLS Experience or Number of Directors Expertise CEO or President of Private or Public Company 4 Experienced leaders capable of overseeing Other Public Board Experience 3 execution and challenging management Financial or Audit Background
Slide 33: Board's Role in Oversight of Risk
BOARD’S ROLE IN OVERSIGHT OF RISK The Board is actively engaged in NBHC’s risk management. Robust Risk Oversight at Board Level Risk Board Oversight Actions Cybersecurity NBHC Audit and Risk Committee is responsible Employs detection and response mechanisms Evolving nature and complexity of the thre
Slide 34: Overview of NBH Bank Board of Directors
OVERVIEW OF NBH BANK BOARD OF DIRECTORS In addition to the NBHC Board, there is an added layer of oversight through the Board of Directors of NBH Bank, NBHC’s wholly-owned subsidiary NBH Bank Board Composition Whitney Bartelli Richard Newfield Chief Marketing Officer Chief Risk Management Officer An
Slide 35: Executive Compensation Program
EXECUTIVE COMPENSATION PROGRAM NBH’s executive compensation practices align management incentives with long-term shareholder interests Components of Executive Compensation (2019) Compensation Metrics Tied to Long-Term Strategy Component Metrics Link to Strategy Base Salary Reviewed annually Amon
Slide 36: Corporate Social Responsibility at NBH
CORPORATE SOCIAL RESPONSIBILITY AT NBH NBH has a long-standing commitment to corporate social responsibility in all of its business activities Our Corporate Social Responsibility strategy guides our focus to contribute to education, workforce development and affordable housing in our communities.
Slide 37: Appendix
~ APPENDIX B® National Bank Holdings CORPORATION
Slide 38: Reconciliation of Non-GAAP Measures
RECONCILIATION OF NON-GAAP MEASURES Six month ratios are annualized As of and for the ($ in millions, except per share) six months ended As of and for the years ended 30-Jun-20 31-Dec-18 31-Dec-17 Net income $ 33.5 $ 61.5 $ 14.6 Add: impact of core deposit intangible amortization expense, after tax
Slide 39: Reconciliation of Non-GAAP Measures (cont'd)
RECONCILIATION OF NON-GAAP MEASURES (cont’d) As of and for the Six month ratios are annualized six months ended As of and for the years ended ($ in millions, except per share) 30-Jun-20 31-Dec-18 31-Dec-17 Adjustments to net income: Net income $ 33.5 $ 61.5 $ 14.6 Adjustments (1) 1.3 6.3 20.4 Adjust
Slide 40: Reconciliation of Non-GAAP Measures (cont'd)
RECONCILIATION OF NON-GAAP MEASURES (cont’d) As of and for the As of and for the ($ in millions, except per share) three months six months ended ended As of and for the years ended 30-Jun-20 30-Jun-20 31-Dec-19 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15 31-Dec-14 Net interest income $ 47.3 $ 97.7 $ 205
Slide 41: Reconciliation of Non-GAAP Measures (cont'd)
RECONCILIATION OF NON-GAAP MEASURES (cont’d) As of and for the ($ in millions, except per share) six months ended As of and for the years ended 30-Jun-20 31-Dec-19 31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15 31-Dec-14 Total shareholders' equity $ 777.0 $ 766.9 $ 695.0 $ 532.4 $ 536.2 $ 617.5 $ 794.6 Les
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